Nov 23, 2005 (09:11 AM EST)
What's Missing from Business Intelligence for Supply Chains?
Read the Original Article at InformationWeek
In the last few years, the desire for better operational BI has grown even more. Going beyond static data snapshots to enable users to identify and analyze ongoing business trends and patterns is at the top of the requirement lists for supply chain managers. Driven to improve operational performance and responsiveness to customer demand, supply chain managers know that better information about the state of their operations and processes will lead to better decisions and outcomes.
Supply chain managers use BI with many goals in mind. One is to reduce inventory levels by improving visibility of data. Another is to identify specific problem areas by analyzing customer service levels. A third is to improve accuracy of forecasting through better understanding of the sources of variability in customer demand. Managers also are using BI to analyze variables in production and identify where to take corrective measures. Some analyze transport performance to reduce costs by finding the most efficient transport providers. Still others use BI to augment their supply chain planning applications so they can understand where and how they deviate from plan objectives. No matter what the specific goal, most senior managers know that the wider their visibility into plans and supporting data, the more they will improve business performance.
But getting broader intelligence about supply chain performance is not easy. Virtually all companies operate with two or more software applications from different vendors to tackle the functions of supply chain management (SCM). Most have at least one enterprise resource planning (ERP) system to do the basic order management, purchasing and accounting functions, and often they augment it with a specific best-of-breed (BoB) application to provide connections across supply chain processes, such as linking inventory replenishment and transportation management.
Many BoB SCM vendors are adding BI or performance management capabilities to their applications. It is not unusual to find a dashboard, an activity monitor or an integrated event management tool within a suite of applications that handle supply chain planning, manufacturing execution, warehouse management, transportation management or supplier relationship management. While each of these systems provides a valuable piece of the supply chain performance puzzle and functional views of specific supply chain subprocesses, they do little to give managers a broad and connected view of supply chain operations or performance.
To get the big picture, at the request of their IT departments, many companies have rushed to adopt large-scale BI application platforms. These platforms create or tap into an enterprise data warehouse (DW) or operational data store (ODS) and sit outside the main ERP and SCM systems, capturing the essential transactional data. BI platforms do a good job of collecting and homogenizing all the disparate data. The cost saving in having one platform (instead of many) that serves all functional areas of business with a standardized set of BI applications is self-evident.
The problem with this strategy is that it often fails to broaden business intelligence about the supply chain. Simply put, there are unique information needs for managing complex supply chain networks and processes that most BI tools do not address. These needs include support for distributed decision-making, master data management (MDM), visibility of trading partners and predictive performance management analytics that evaluate supply chain “what if” option planning scenarios.
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